surplus of that account the deficiency in the trustee's private account. But the deposit may be apportioned, and if it exceeds what the depositor owes his principal, the part which is his own may be set off. And the truth of the case may always be proved and a set-off may be made, if the relations between the trustee and cestui que trust are such as to permit it without injustice, and the trustee asks for it.2 If the banker has no notice of the trust, it seems, he may set off debts of the trustee.3 § 271. Corporations and Shareholders. If a corporation or company with limited liability is bankrupt, a shareholder must pay in full, without setting off debts due him by the company, all assessments or calls for capital stock not paid in, or premium notes given to a mutual insurance company, or claims for capital withdrawn; because these dues form a part of the fund to which the general creditors have a right to look, very much like the capital of a deceased copartner which has by his direction been left in the business.1 When the liability was unlimited, so that the shareholders were partners, justice between the partners required that each should pay only his net share of the liabilities. and set-off was admitted.5 So, by some of the State laws, there is no such quasi trust but the assessments are mere debts, and any debt of the company may be set off against them.6 And, where both the stockholder and the company are bank 1 Ex parte Adair, 24 L. T. N. s. 198; s. c. nom. Ex parte Kingston, L. R. 6 Ch. 632. 2 Pedder v. Preston, 12 C. B. N. s. 535; Bailey v. Finch, L. R. 7 Q. B. 34. 218. 1 Ch. 528; Calisher's Case, L. R. 5 Eq. 214; Barnett's Case, L. R. 19 Eq. 449; Black's Case, L. R. 8 Ch. 254; Re Whitehouse & Co., 9 Ch. D. 595; Howe v. Snow, 3 Allen, 111. See Re German Mining Co., 4 De G. M. & G. 3 Jenkins v. Walter, 8 Gill & J. 19, and the cases there cited; Pondville 4 Sawyer v. Hoag, 17 Wall. 610; McLaren v. Pennington, 1 Paige, 102; Lawrence v. Nelson, 21 N. Y. 158; Osgood v. Ogden, 4 Keyes, 70; Hillier v. Allegany Ins. Co., 3 Penn. St. 470; Jenkins v. Armour, 6 Biss. 312, Fed. Cas. No. 7260; Grissell's Case, L. R. Co. v. Clark, 25 Conn. 97; Boyd v. 5 Re West of Eng. Bank, 12 Ch. D. 823; Grissell's Case, L. R. 1 Ch. 528, 6 Pondville Co. v. Clark, 25 Conn. 97; Boyd v. Hall, 56 Ga. 563. rupt, the set-off is usually admitted.1 Since these assessments are to be paid in full, a set-off may be made between them and the dividends due the shareholder, if both mature at the same time. But the liquidators have no lien on dividends declared to a solvent shareholder, to meet possible future calls. If he should be insolvent, it is within the ordinary power of a court of equity to permit his dividends to be withheld to the extent of his debt to the assignees. The courts of Connecticut and New Jersey have decided that the depositors of a savings bank have such a community of interest that they are in some sort responsible for each other, so that a depositor has no equity (there being no statute), to set off against his deposit a debt which he owes the savings bank. The opposite result was reached by the Supreme Court of New York. It was held in England, that, when in winding up an insurance company the current policies were to be valued like debts, yet they were not debts, and a set-off could not be made between them and ordinary debts of the company.4 § 272. Annulling and Discharge as affecting Set-off. When the bankruptcy had been annulled, money of the estate which the assignees had deposited with bankers, reverted, in equity, to the bankrupt, even without an order of court, and he was allowed to set off the deposit against a debt he owed the bankers; and, in the converse case, the assignees, or their bankers, could maintain a set-off against the bankrupt, or against a creditor attaching the debt. When the bankrupt has been refused his discharge, or only his person is relieved, his old debts may be set off against new credits.8 If he has obtained his discharge, his old debt cannot be set off against an indebtedness to him growing out of new transactions.9 1 Re West of Eng. Bank, 12 Ch. D. 823; Grissell's Case, L. R. 1 Ch. 528. * Ex parte Price, L. R. 10 Ch. 648. Bailey v. Johnson, L. R. 6 Ex. 279; Brown v. Coggeshall, 14 Gray, 134. 2 Osborn v. Byrne, 43 Conn. 155; L. R. 7 Ex. 263. 3 Receiver of New Amst. Bank v. Tartter, 54 How. Pr. 385. 401. 7 Beach v. Viles, 2 Pet. 675. 8 Primer v. Kuhn, 1 Dall. 452. Hayllar v. Sherwood, 2 Nev. & M. § 273. Joint and Separate Debts. - As respects set-off between joint and separate debts, an important distinction is taken in this country. If A sues B, C, and D for a debt due from them jointly, there is no good reason why a debt he owes either of them should not be set off, since either defendant has a right to pay the joint debt; and set-off is payment. If A has become bankrupt, there is the more reason to observe this distinction; it is admitted by statute in some States only when the plaintiff is either insolvent or out of the jurisdiction. But the better opinion is in favor of the set-off in all such cases.1 When, however, the debt is due to several plaintiffs, or to one plaintiff and others not parties to the record, even though the joint creditors are partners,2 a debt due from one of them to one or more defendants cannot be set off, because a payment in that mode would be fraudulent, unless made with the consent of the co-owners of the debt sued on, since it would remit a creditor for payment to his co-owners instead of those to whom he had given credit; and though it might be valid in the case of partners, if done out of court in ignorance of the fraud, a court, knowing all the facts, cannot permit it. 1 Robertson v. Parks, 3 Md. Ch. 65; Watkins v. Zane, 4 Md. Ch. 13; Gibbs v. Cunningham, ib. 322; Meeker v. Thompson, 43 Conn. 77; Goodenow v. Buttrick, 7 Mass. 140; Baker v. Kinsey, 41 Ohio St. 403; Ashley v. Willard, 2 Tyler, 391; Robinson v. Beall, 3 Yeates, 267; Childerston v. Hammon, 9 S. & R. 68; Stewart v. Coulter, 12 S. & R. 252; Hurst v. Johnston, 6 Phila. 593; Crist v. Brindle, 2 Rawle, 121; Balsley v. Hoffman, 13 Penn. St. 603; Hollister v. Davis, 54 Penn. St. 508; Dunn v. West, 5 B. Monroe, 376; Powell v. Hogue, 8 B. Monroe, 443; Jones v. Jones, 12 Ala. 244; Austin v. Feland, 8 Mo. 309; Kent v. Rogers, 24 Mo. 306; Meriwether v. Bird, Georgia, 594; Wartman v. Yost, 22 Gratt. 595; Leach v. Lambeth, 14 Ark. 668 (overruling some earlier decisions); Robinson v. Furbush, 2 Glaister v. Hewer, 8 T. R. 69; Von Pheel v. Connally, 9 Porter, 452; Duramus v. Harrison, 26 Ala. 326; Collins v. Butler, 14 Cal. 223; Jones v. Howard, 53 Miss. 707; Pritchard v. Draper, 1 Russ. & Myl. 191; 2 Cl. & Fin. 379; Piercy v. Fynney, L. R. 12 Eq. 69; Pierce v. Pass, 1 Porter, 232; Taylor v. Bass, 5 Ala. 110; Brackett v. Sears, 15 Mich. 244; Threlkeld v. Dobbins, 45 Ga. 144; Story v. Kemp, 55 Ga. 276. - In bank § 274. Joint and Separate Debts in Bankruptcy. ruptcy, debts of the firm and credits of the partners, or vice versa, cannot be set against each other, for the additional reason that the joint credits must be applied to pay joint debts, and the separate credits to pay separate debts.1 Excepting when this principle interferes, there is no objection to the set-off, if by law or by contract the debts are both joint and several, and substantial justice will be done. And if the debt though joint in form is several in equity, it may be set against a separate debt. At law, when one partner or joint debtor is dead, or has been discharged in bankruptcy, there may be a set-off between the separate debts of the surviving partner or contractor and those due the late firm. When, however, a surviving partner is bankrupt, joint credits must go to pay joint debts and separate credits to separate debts, and, therefore, there can be no set-off between the different classes.2 § 275. Insurance Brokers. - By a singular course of trade in England, when a marine policy was obtained by a broker, the underwriter gave him exclusive credit for the premium, but was indebted to the assured for losses and return premiums, It was usual to settle the whole account with the brokers, and if a return premium became due, both parties remaining solvent, it was held that the broker might have a set-off against the underwriter; as there was, however, no actual mutuality 3 1 "His right," said an eminent judge, of one who attempted to set off a debt due from the firm against one which the assignee in bankruptcy was prosecuting for the estate of one part ner, J.; Gray v. Rollo, 18 Wallace, 629; Hitchcock v. Rollo, 3 Biss. 276, Fed. Cas. No. 6535; Wright v. Rogers, 3 McLean, 229, Fed. Cas. No. 18,090. The case of Tucker v. Oxley, 5 Cranch, 34, where such a set-off was made, is explained in 2 Story Eq., 13th ed., § 1437, note 1, and in Drake v. Rollo, ubi supra. "his right is not coextensive with his obligation. His obligation is to pay the whole; his right is to receive only a part." Per Sir M. Grant, Addis v. Knight, 2 Mer. 117. See Lanesborough v. Jones, 1 P. Wms. 325; Ex parte v. Goulding, 2 Gl. & J. 118; Ex parte Soames, 3 Dea. & Ch. 320; Ex parte Twogood, 11 Ves. 517; Williams v. Brimhall, 13 Gray, 462, where Bigelow, J., states the reason very clearly; Forsyth v. Woods, 11 Wallace, 484, per Strong, 2 Meader v. Leslie, 2 Vt. 569; Waln Hewes, 5 S. & R. 468; Walker v. Eyth, 25 Penn. St. 216; Cosgrove v. Cosby, 86 Ind. 511; Shipman v. Lansing, 25 Hun, 290; Seligmann v. Clothing Co., 69 Wis. 410. 8 Shee v. Clarkson, 12 East, 507. of credit, if the broker became bankrupt without having paid the premium, the underwriter could not set it off against a loss; and, on the other hand, the assignees of the broker might recover it of the assured; 2 while, if the underwriter was bankrupt, the broker could have no set-off for return premiums or losses, but must pay the assignees the full premium, unless the policy was in his name, and he had an interest in it, either as a part owner of the property insured or by way of lien. The fact that the broker was acting under a del credere commission, and so was bound for the loss, was held in one case to give him a right of set-off; but, in later cases, his liability to his principal is held to be res inter alios to the assignees of the underwriter, and not to create the necessary mutuality.* case must, therefore, be considered as overruled. That When credit has, in fact, been given, as when an account of completed transactions has been stated and settled between the broker and the underwriter before the bankruptcy of the latter, the broker may set off the amount found due him upon such accounting against any debt afterwards accruing from him to the underwriter; but not a merely conjectural or pro forma balance which was to be fully adjusted afterwards." When a sum of money had been paid by a foreign government as compensation for losses by illegal captures, a broker who had retained the policies and other papers in his hands was held to have a lien upon the fund for such a balance, as against the assignees of the underwriters. There was no question of waiver, because he had proved no debt in the proceedings. In that case, the underwriter claimed by subrogation through the assured, and, therefore, was bound by the lien which the broker had as against the assured. § 276. Factors and Brokers. There may be mutuality by estoppel, as when an agent has been authorized to deal in his 1 De Gaminde v. Pigou, 4 Taunt. 246. 2 Power v. Butcher, 10 B. & C. 329. 8 Minett v. Forrester, 4 Taunt. 541; Goldschmidt v. Lyon, ib. 534; Parker v. Smith, 16 East, 382; Wilson v. Creighton, 3 Doug, 132. 4 Baker v. Langhorn, 6 Taunt. 519; Peele v. Northcote, 7 Taunt. 478; Koster v. Eason, 2 M. & S. 112; l'arker v. Beasley, ib. 423; Lee v. Bullen, 8 E. & B. 692 n. 5 Parker v. Smith, 16 East, 382. |